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Vol 1, DEC.

2011

IBS Hyderabad

From The Editors Desk


- Charu Attri

1. Mayday -Juhi 2. Diasporas : Interlopers or Benefactors?? - Keertichand 3. Fight Back The Uncertainity -Rajlakshmi Mitra 4.Amazon Revolutuion -Shiv Mundra 5. Consolidating By Dividing -Rahul Bhargava 6. Economic Growth vis--vis Environmental Degradation? -Puneet Gupta 7. The Dragon Infiltrated the East Wing While The Elephant Was Guarding The West! -Charu Attri 8.Saving Good or Not So Good??? -Mansimran Kaur

Inside the Issue:


I call it the "Need to Know syndrome :the sole reason why Google is God of Information. People have this basic need to know more and more. To be educated and to be able to understand. Luckily every now and then we find a source as enriching as Focus, wherein we are able to read and understand what is relevant and important to all of us. This time the Team Focus has tried to pick up the recent issues , so that all those going in for SIP and Placement process may be able to pick up on what exactly is going on in the real world. We have articles addressing the kingfisher issues, to Indo-Sino Relation status and the more recent Number of rising Diasporas. Also herein you will find an article addressing the UP split and also the Amazons Success Story. All in All an issue worth savoring. Have a good December!

"Nothing in the world is more dangerous than sincere ignorance and conscientious stupidity."
Martin Luther King Jr.

2 Dec. Vol 1, 2011. The Ecobizz Newsletter

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Aviation Sector

MAYDAY!
-Juhi

Lets start by having an overview of the Indian


aviation industry. The AAI (Airports Authority of India) manages and operates total 126 airports which include 16 international airports, 89 domestic airports and 26 civil enclaves. Top 5 airports in the country handle 70% of the passenger traffic of which Delhi and Mumbai together account for 50%. The market share of the Indian Domestic Carriers for October 2011 is shown below. India's domestic aviation market expansion has been the strongest in the world - tripling in the past five years, according to the International Air Transport Associations (IATA) report (September Stats).

leased by DGCA (Directorate General of Civil Aviation). The Current Situation

At the end of second quarter Jet reported a loss of Rs 714 crore, Spicejet Rs. 240 crore and Kingfisher Rs. 469 crore and for Air India the debt burden was hovering around Rs. 67,000 crore. The cash-strapped Kingfisher airline has cancelled hundreds of flights in the last week to reduce costs. It lost over Rs.1000 "The airlines Industry is not that crore last year, has glamorous as it looks from outside.100% never really made any profits and owes of its time goes in a horrible and its lenders over Rs. frustrating quest for cost cutting.Most of 7000 crore.

India is currently the ninth largest market in the world for the aviation industry, according to RNCOS (a market research consulting Services company) report Indian Aerospace Industry Analysis. The number of passengers carried by domestic airlines during Jan-Aug 2011 was 39.63 million against 33.41 million during the corresponding period of the last year thereby registering a growth of 18.6 per cent, according to data re-

the airlines in the world which are profitable are cost-cutter.Therefore business model of airline industry should be given prime importance

Reasons for the ailment of the Aviation Industry

The problem occurring in India is far from a Global Phenomenon. Top United States airlines like United, US air and Delta reported a good half-yearly profit. Delta reported its highest quarterly profit in history and Lufthansas profits were doubled. So, what are the problems with the Indian carriers restraining it from enjoying profits like its foreign counterparts? ATF: Aviation Turbine Fuel (ATF) is the largest cost component for an airline and is
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Aviation Sector % Share 24.8% 19.6% 16.7% 16.6% 16.1% 5.3%


Vijay Mallya, Chairman, Kingfisher Airlines blamed the high ATF prices for the losses and asked the Govt. for the permission to directly import ATF. But is that really the problem? Obviously the huge amount of loss and debt Kingfisher has was not accumulated suddenly. Then why were any not concerns any raised when the losses were at a lower level and were manageable? The airlines Industry is not that glamorous as it looks from outside. Airlines spend 100% of their time in a horrible and frustrating quest for cost cutting, meeting demanding schedules and in keeping the planes busy. The airlines business requires a huge investment of capital, the competition is intense, and the customers are extraordinarily price sensitive. Most of the airlines in the world which are profitable are cost cutters and hence attract the maximum number of passengers. Indigo followed suit in India and is hence profitable. So, Kingfisher cannot claim that its

Airline/Company JetAirways (includes Jet Lite ) IndiGo Kingfisher NACIL SpiceJet GoAir

available globally much cheaper than in India. Everywhere else it forms about one-third of the airlines operating cost but in India it is about 45%. Adding to the woes are the high landing and navigation charges. The sales tax on ATF varies between 4-32% in states. The Civil Aviation ministry hence asked the finance ministry to bring it under the goods and services tax which will lead to an uniform tax of 12% for the states. Rapid Expansion: Rapid Expansion and inadequate funding have landed the airlines in trouble. Ironically, the growth rate of 18.6 % of which India was proud of led to the problems. It led to a capacity creation far more than the demand. Experience: Most of the players in the Indian Aviation Industry are very young, hardly completing a decade in the business. They are still learning to deal with business cycles. Foreign giants have been in this business for decades and have polished business practices. These factors along with the depreciation of rupee caused the financial problems for the airlines. The Problems with Kingfisher airlines

4 Dec. Vol 1, 2011. The Ecobizz Newsletter

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to increase their exposure.

Aviation Sector

The failed Kingfisher management should be changed. Kingfisher has already been given a fresh chance to recover through concessions and rescues by banks, but in vain. Banks can act by converting a big portion of their outstanding loans to equity at the current market price giving them a 51% stake and then auctioning it to the highest bidder. If Vijay Mallya wants to save Kingfisher he should sacrifice his other assets and should bring in fresh equity, as if an auction is done, the banks will get plenty of bidders in the form of many well-off Indian groups having huge cash reserves.

problems are common to all the airlines present. Actually Kingfishers business model was flawed from the start. It tried to provide stellar treatment to its customers in a price-sensitive market. It was very unlikely to work and indeed it never did. Banks also did not spot this problem earlier. Kingfisher cant blame the Govt. tax structure for its losses as it already has been rescued once. Kingfishers bank loan got converted into equity at a very favourable premium of 62% to the existing market price. Even after this it has plummeted. Its debts exceed Rs 7000 crore even after being restructured and slashed. Fixing the problem for Kingfisher It is not that easy now to save Kingfisher. Provided the amount of debt and losses Kingfisher has, it is too difficult to engineer a quick fix. It plans to raise Rs. 2000 crore to stay in business. The problem is that the banks have already restructured their loans once and still the business didnt generate any returns. So they dont want
5 Dec. Vol 1, 2011. The Ecobizz Newsletter

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The Culture Shift

DIASPORAS: INTERLOPERS OR BENEFACTORS???


- Keerthichand

How would you feel if you find people other


than your near and dear living in your home with no sign of leaving it at any time? How would you react when someone declares that those people have got the same rights at your home just as you with only very few restrictions? Would you retaliate or accept those people with open arms and a big heart?

gration, or scattering of people away from an established or ancestral homeland or "people dispersed by whatever cause to more than one location", or "people settled far from their ancestral homelands". The groups of people in relation to movement from one region to another are termed Diasporas.

From time immemorial, there has been a substantial movement of people belonging to various Well, these questions would be answered differregions of the world from ently by different persons. their homelands to other But, generally one can parts of the world for a only expect not so posiThe immigration policies have multitude of reasons. tive responses for the Some move for the sake above questions from taken an illiberal shade about of adventure, some for whomsoever. protecting themselves them because of the cyclical Imagine if this is the story economic gloom that subsequently from bullies of various segments of the society in relation to ones home triggered the pressure on rich and so on. But, most of what one would feel if the the people move from countries on a secular and object in question is ones one region to another in motherland! socialistic front search of greener pasYes, I have been beating tures- a better standard of around the bush all this living. while to drive home one In these challenging and competitive times the of the most important bones of contention being urge to seek a better way of living by striving faced by the countries or economies worldwidehard in ones life has become an incontrovertible IMMIGRATION: A BOON or A BANE? objective of almost every individual. DIASPORA, though this term does seem like With the advent of liberalization and globalizathe title of a Hollywood movie belonging to the tion the trend in relation to the people belonging sci-fi genre, with a sincere apology to movie to developing economies moving to the develfreaks I would like to dispel off their preconoped economies with the aim of achieving higher ceived idea by highlighting on the fact that Diasstandard of living and higher financial status pora has its basic meaning in relation to the asbecame indisputably conspicuous. pect of Immigration. As per the standard definition Diaspora is a Greek word which means the movement, miWith the passage of time many people have flown with the tide and subsequently with the
6 Dec. Vol 1, 2011. The Ecobizz Newsletter

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massive movement of people from developing economies the Diaspora of developed economies went on increasing at an alarming pace. Thus, given the contemporary scenario the nations worldwide especially the developed countries are facing the threat of Diasporas outnumbering the natives of the country. Therefore, most of the developed economies especially united states have tightened their immigration policies discouraging the people from alien countries from intending to settle in their countries for a long period of time or to the extreme settling permanently. Thus, all those who are planning to pack up your bags and fly away to the western lands would have to think twice before you take up such a decision. With the stupendous increase in the population of Diaspora many anti-immigrant parties have come into the landscape vehemently protesting against immigrants and making the border controls much more stringent. The immigration policies have taken an illiberal shade about them because of the cyclical economic gloom that subsequently triggered the pressure on rich countries on a secular and socialistic front. The African-American president Barack Obama promised of immigration reform in the guise of liberalistic approach of his leadership

The Culture Shift


but it hardly became operational making his real intentions explicitly evident. Though the countries have been showing an inhospitable attitude towards Diaspora they are still in a dichotomy about their decisions pertaining to slamming the doors against immigrants because of one concrete reason-The Economic impact and implications of the contribution in relation to the various Diasporas of the nations. A multitude of linguistic and ethnic groups are scattered in different parts of the world. So all of these groups having the commonalities pertaining to language and kinship do interact with one another and thereby facilitate easier international trade and commerce. The Diasporas do lead to the speeding up of the business process when different nations are involved in trade. For example, a Malaysian trader in United States can alert his friend in India about the surge in demand of Indian silk saris due to the cultural festival being organized by the predominant Indian societies in US for over a month marking the traditional New Year festival of Indians. The trader in India can ship Sarees to USA before the end of the cultural festival , given the faith he has in his friend.

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The Culture Shift

Trust plays an indispensable role especially in emerging economies as the rules of law are not so strong and specific over there. A holistic knowledge of local culture, customs and lifestyle of the people of ones homeland also makes the process of strategizing for the sealing of myriad business deals relatively smooth. Diasporas facilitate the exchange of many a bright and diverse bunch of ideas among the nations. A large number of students whose ethnicity can be traced to emerging economies are educated in well reputed western universities. Some of them go a long way in contributing to the Business and technological arenas of their foster countries and another chunk of them return back home and contribute the same to their homeland. Thus, we can observe that the phenomenon of brain drain does take place in both the directions and subsequently leads to the benefitting as well as in a way swindling with the developed and the developing economies. The most notable embodiment of this phenomenon in Indian context is our Prime Minister Dr. Manmohan Singh who got educated from the universities of oxford and Cambridge and played

a remarkable role in bringing about great economic reforms in the late 1990s. In conclusion, the conservative good old world would always consider the closing down of their economies for Diasporas. But, in this era of a borderless world where liberalization and globalization became the universal principles governing the operations of various economies worldwide, such decisions would prove disastrous. So, the Governments worldwide should undertake judicious measures so as to strike a balance in such a way that sustainable development of the world economy is achieved and at the same time the interests of the natives and the Diasporas are not buried and their rights are safeguarded to the desired extent.

8 Dec. Vol 1, 2011. The Ecobizz Newsletter

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Planning And The Strategies

FIGHT BACK THE UNCERTAINTY


- Rajlakshmi Mitra

We are very well aware of the mishaps, wrong-

doings and many illegal and uncertain things happening around us. But do we ever ponder upon what might be the reasons, what might be the underlying factors and the consequences which are not visible to us? In every field, be it political or social or financial or anything, the world has become too complex to predict financial condition, to predict consumer demand, to account for volatility in market and so on. The financial upheaval that we are facing now, was this not known beforehand, or were we too lazy and laid back to wait for it and react now?? The concerned institutions could have been proactive enough, isnt it? In this era of uncertainty, So, we cannot afford to remain Not only has this, changes in reactive anymore. What we wake up, fight back, customer demand happening need is leadership: leaders in a heartbeat and catering to innovate, be proactive and who will be transparent pertheir changing needs and prefimplement" taining to the current and fuerences has become a daunting ture changes with appropriate task. They are losing trust in forecasting and communicaestablished bands and institution abilities to remain up to tions. Its not that this situation date about current happenings has arrived in a blink of an eye. and strategize accordingly. It has emerged slowly, cunAlso the ability to adapt to ningly surpassed our short-sightedness and now new realities and changes need to be there. stands like a challenge in front of us. This is Changes may pose as quite a threat as it carries again an example of being reactive rather than lots of uncertainties with it for future. What leadbeing proactive. It is now after facing the adversiers need to do is act by not looking into the rear ties in every sphere, we are realizing that all view mirror, because the idea of acting accordthese kinds of uncertainties occurred due to the ing to the past might bounce back as changes are combined effect of lack of accountability, faruncertain and moreover, negative. So to thrive in sightedness and crisis of governance. uncertainties, it would be tactful to strategize according to scenario planning. It is forecasting In India, good governance means removing ecoand designing conditions and situations, both nomic disparities, fighting corruption, improving better and worse, that might occur in future and bureaucratic and political conditions and much plan to thrive and sustain in worse conditions
9 Dec. Vol 1, 2011. The Ecobizz Newsletter

more. Also our country has been striving hard for many years to achieve them. So far we have been successful but not to a desirable extent. This has been because of the laid back attitude of the concerned authorities and the failure to comprehend the monstrous nature of problems in future that is now. In short, what we call as the era of negative uncertainty is the same as the results of the seeds of lack of governance, accountability and most importantly effective leadership which we have been sowing for many years now. Its because of this ineffective governance and leadership that we remain silent spectators of the scandals and bad practices.

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Planning And Strategies


of the brands and weakening of long term relationships, innovation is the key. Not only this, innovation and uniqueness even in the government policies, in political and social front has become the need of the moment. Moreover, its not only innovation, but borderless innovation wherein people of all designations in an organization will be free to impart and share their ideas and views, wherein there will be no restriction on the kind and nature of suggestions. Today, where innumerable products and services are cluttering the market, where general public is demanding CHANGE in policies, regulations which will add value and new dimension to the society, innovation along with effective analysis of present and future situations and that to assisted by effective leaders has become obligatory. While we talk about implementing these in organizations and institutions, the need to fight back the uncertainty should be made evident to school going kids. Rather, I believe this should be the most incumbent step to take at this point of time. This can be done by guiding them to frame scenarios, encouraging them to analyze, comprehend and come out with solutions and consequences. This will help them know about their surroundings, how to react tactfully and intelligently in different situations and will ultimately shape their personality and prepare them for future.

and develop leaps and bounds in favorable conditions. The accomplishment of this task demands developed bureaucratic and political accountability and moreover extensive commitment by the management of an organization. This is because bureaucracy hinders generation and implementation of such plans. For scenario analysis, a leader should systematically follow the steps below: Determine the factors which might lead to a scenario in future. This can be done by analyzing the present forces responsible for the working of the business. The second step would be to rank the factors or drivers according to their impact and significance in the business. Doing so will filter out some of the factors having greater chance of impact in future scenarios. Once the leader differentiates and understands the forces, their extent of impact on various issues, now formulate the best and the worst scenarios. The scenarios now have to be presented in front of the group members wherein the entire layout of the probable issues, forces responsible and anticipated solutions will be further discussed in all ways to come out with proper plans. While strategic planning is vital for scenario analysis, another factor which plays an undisputed role is innovation. Specifically speaking, pertaining to the diminishing legacy of strongest

10 Dec. Vol 1, 2011. The Ecobizz Newsletter

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The Success Story

AMAZON REVOLUTION
- Shiv Mundra

Who knew back, when Jeff Bezos launched Amazon in 1995 as an online bookstore that it will flourish into a book publisher later on. With its headquarters in Seattle, Washington, Amazon is well-known for being one of the first major companies to sell goods through the web. Amazon enjoys a Fortune 500 e-commerce ranking that takes the jewel for being the worlds largest online retailer. Now it is not just online bookstore but a store of every kind of possible item that one can imagine as well as a book publisher.

There was a time when Amazon would sell the books published by With the success of Amazon and other publishing houses the opportunity they give authors As of now Amazon has but now it has become published about 150 for a one-stop shop: agent, one itself and is pubbooks including literalishing both digital and publisher and distributer, it is ture in translation rangprinted works of their ing from romance to questioning: are traditional own authors. After the thrillers. Along with that publishers still needed? launch of their first imthey have decided to reprint in 2009, they lease more than 100 titles launched six more and by October 2013. then hired master of the Now coming to the marpublishing industry, the keting side, how would former CEO of Time they market and distribute their books? Amazon Warner Book Group, Larry Kirshbaum, to head a is certainly the largest bookseller in the world. It seventh imprint that is currently in the making as also offers the best prices but it is their outthey setup a flagship line run by publishing vetstanding user experience which really brings cuseran. tomers back. Amazon enjoys loyal customers and Larry will be building out a publishing team in New it consistently produces great recommendations. York and will cofound new imprints under the AmaIn 2005, it acquired the print-on-demand comzon Publishing umbrella, with a focus on acquiring pany BookSurge and Mobipocket.com and also the highest quality books in literary and commercial announced that it will require all print-onfiction, business and general nonfiction, - Jeff Belle, demand publishers to use its BookSurge print-on an Amazon executive said in the e-mail . -demand service for their books which are to be
11 Dec. Vol 1, 2011. The Ecobizz Newsletter

This can be of a great advantage for the consumers at last but it will really harm the middlemen and retailers as pointed out by Eileen Gittins, CEO of Blurb, an online print-on-demand publisher of photography books The book market in the United States is worth about $32 billion a year; the rest of the world, an additional $36 billion. Who makes the money? Not the author. Retailers take almost 50%. The agent takes 15% to 20%. The publisher gets squeezed--it's cause for huge celebration if they make 20%. On a book that costs $24.95, the author gets at most $1 to $1.50".

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The Success Story

sold on Amazon. It also acquires an e-book software company. In November, it launched the ebook reader Kindle. Amazon is revolutionizing the book printing business through vertical integration whereby it will have its own authors, publishers and have direct contact with the customers which leads in cutting down the cost of middlemen. Lets look at the numbers. Assuming that Amazon already pockets 50% of the market price of the book, it could directly have contract with authors and cut down the middlemen in the form of the agent and the publisher which would again free up 30% to 40% of all the chunk, which can easily be shared between Amazon and the author. In the coming years, Amazon will build up its power to make direct relationship with the authors which will gradually phase out

the publishers and the agents. Amazon will first go after the independent print-on-demand selfpublishers and get the best authors from the world over. Amazon will then take on the large publishers. On the other hand, several publishers are unhappy with the efforts being put in by Amazon.com. Publishers are terrified and dont know what to do, said Dennis Loy Johnson of Melville House, who is known for speaking his mind. In the words of Richard Curtis, a longtime agent who is also an e-book publisher Everyones afraid of Amazon; if youre a bookstore, Amazon has been in competition with you for some time. If youre a publisher, one day you wake up and Amazon is competing with you too. And if youre an agent, Amazon may be stealing your lunch because it is offering authors the opportunity to publish directly and cut you out. Its
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The Success Story

an old strategy: divide and conquer. Again Russell Grandinetti, one of Amazons top executives said the only really necessary people in the publishing process now are the writer and reader and everyone who stands between those two has both risk and opportunity. Publishers feared about their future when Amazon introduced the Kindle Fire, a tablet for books and other media. As Jeffrey P. Bezos, the companys CEO referred Kindle as an end-to-end service conjuring up a world in which Amazon develops, promotes and delivers the product. In my opinion this is the best move by the Amazon. In the new world now Amazon becomes the retailer, marketer, publisher and agent combined and takes 65% of the revenues, offering 35% to the author. Henceforth it will end up with a much better and fairer world. For decades, the publishing industry has taken huge advantage of the authors but now the authors will also enjoy the advantage by getting the fair percentage of the revenue. Amazon executives interviewed at the companys headquarters revealed Amazons power and the publishers love with their own demise. One question might arise in your mind; can Amazon secretly create its own best sellers? The Hangmans Daughter was an e-book hit.

Amazon bought the rights to the historical novel by a first-time writer, Oliver Potzsch, and had it translated from German. It has now sold 250,000 digital copies. It was a difficult task for Amazon to apply themselves into the mind of readers by expanding the business with their publishing division. With the success of Amazon and the opportunity they give authors for a one-stop shop: agent, publisher and distributer, it is questioning: are traditional publishers still needed? What kind of implications do YOU think Amazons publishing sector will have on the book publishing industry?

13 Dec. Vol 1, 2011. The Ecobizz Newsletter

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Political Stance

CONSOLIDATING BY DIVIDING
-Rahul Bhargava

Unity in Diversity is what we call our endeavour

that makes us stand out in the international arena we are the greatest democracy after all! But does it mean that banking upon this strength of As per the data the growth mantra is undisputaours, we should continue to diversify endlessly? ble. Surely its a daunting task to administer the Let me break the ice. I am referring to diversifymost populous state accommodating 80 Lok ing the nation geographically, culturally and orSabha constituencies and 404 MLAs and with ganizationally. I am referring to the evolution of Dalits, Swarans, Muslims, Jats, Kayasthas, GuUttarakhand from Uttar Pradesh, Jharkhand jjars etc. residing in a single state. For sure as the from Bihar, Chattisgarh from Madhya Pradesh. responsible CM of the But it has happened. most politically powThere is nothing much erful state, Mayawati we can ponder upon. is keen to achieve the What I am worried growth. But is that the about is the T, the only reason? Can Telangana issue. Every there be some time before I plan my Mayawati's divide-and-rule policy Political Mantra weekend outing, I creating may be a political ploy to sidetrack all that is curiosity so hope that there is no much than Bandh. Added to the allegations of corruption and interest? May be the cart of worries the answer is the Semimismanagement leveled by her news dated 15th Nofinals before the finals vember 2011 from opponents against her Government. - the upcoming UP Lukhnow that the state legislative asChief Minister of UP sembly elections that Mayawati would table will affect the upcoma proposal to divide ing 2014 Lok Sabha the state into four Elections. Vote bank smaller states namely politics seems to be Poorvanchal (East UP), the right answer. All of a sudden the ruling party Paschhimanchal (West UP), Bundelkhand and would not have placed demands like division. Awadh (central UP). The officially stated reason Justified! as tough competition is ahead for the is that easier to manage smaller states are easy to Bahujan Samaj Party (BSP) in the form of Muadminister and has higher prospects of growing layam Singh Yadav lead Samajwadi Party (SP), faster. In bigger states some areas typically tend Rahul Gandhi and Digvijay Singh mentored to be ignored and if they were divided into sepaCongress collaborating with the Rashtriya Lok rate states, there would be more focused atDal lead by Chd.Ajit Singh who exercise great tempts to achieve growth. In this context, four degree of control over western belts of UP. The States would mean four new capitals, and the Bhartiya Janata Party (BJP) might be the under14 Dec. Vol 1, 2011. The Ecobizz Newsletter

infrastructure that will be put in place for the development would ensure for the populace there.

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Political Stance

dogs. Mayawati would take no chance to when it comes to the question of retaining herself. Every political party realize the importance of Uttar Pradesh. Rahul Gandhi apart from Amethi is seen in some part or other every second week leaving no margin for error for the BSP as its demonstration was seen in Bhatta-Parsaul village controversy. Samajwadi Party hold significant muslim vote bank and is the only other prominent regional party. Rajnath Singh has been the ex-CM and trying hard to regain his position on behalf of the BJP. The ever maverick and dynamic Uma Bharti has specially made her comeback in the BJP to counter Digvijay Singh, the General Secretary of Congress and UP head of operations. Mind that Uma Bharti had made Digvijay taste an embarrassing defeat in Madhya Pradesh once. To add more flavour to the curry we have RLDs Chd. Ajit Singh who doesnt want others to know whom he would prefer to support. He would play his card when and where he would see the opportunity. Along with

other niche regional parties, the Communists are everywhere to create confusion and dont undermine the lights of Amar Singh or even Kalyan Singh who have nothing to lose. To conclude its totally messed up. Before the respective oppositions could plot anything against her, Mayawati has tried to play smart illustrating her core competence of being proactive. She has diverted public attention away from her governance record which is under attack from the opposition. The move can be observed as Mayawati's trump card for upcoming assembly elections. The move, we can believe has been made to compensate for anti-incumbency factor, divert public attention from corruption charges against Mayawati and to put opposition parties on the back foot. Its natural that opposition parties describe the move as a political stunt. In fact, the SP's stand is that dividing UP will bring to an end the supremacy and influence that 80 Lok Sabha seats gives the state in New Delhi. It would reduce the dominance of the state
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which is privileged to supplement the nation with most number of Prime Ministers. The SP opposes division and advocates so as their Muslim vote bank would be adversely affected.

Political Stance
There is of course a compulsion that motivates all politicians. More states means more party people can be accommodated as MLAs and ministers and in state corporations and the like. Politicians adore power and position and the lure of being able to accommodate more of their people as MLAs is too much for the asking. Is it Mayawatis electoral masterstroke or political overkill or a suicidal move?, will be addressed in 2013 but the core issue here is the division of the nation into smaller states. Excess of everything is bad. Managing a small state is convenient but managing too many states is a menace. Bodoland, Gorkhaland, Telangana and Vidarbha, to name a few, have already put forward their claims for independent statehood. Our country, shaped by centuries of oppressive colonial rule, may now be deformed beyond repair due to the creation of new states as demands for fresh States may lead the nation to grapple with massive problems. Better not have a State explosion alongside population explosion! But the relief is that we still have a long way to go. Its the Parliament that gives the final nod. Thats not going to be possible without many committees being set up and many debates taking place. So sit back & relax & think what is fair and what is not.

STATE

PreFormation GDP 9.3% 11.5% 7.5%

PostFormation GDP 12.7% 16.6% 16.2%

Jharkhand Uttarakhand Chattisgarh

Growth Rate (GDP) before & after formation Source: www.indiatimes.com

Moreover Ajit Singh is indifferent on the issue as the presence of RLD is negligible in the state except for the western UP. But the irony is that major national parties internally favour the division. Analyzing the current scenario, Congress hardly prevails in any bigger state except for Andhra Pradesh where it is struggling to cap the agitation to carve Telangana out. Tackling TRS and Jaganmohan Reddy simultaneously is the main agenda rather than developing the state. So the Congress, strategically supports the creation of smaller states but it cant concede the demand and get the proposal approved by the whole and sole parliament atleast till this winter session as it is currently facing the havoc of 2G corruption charges, inflation issues, its allies DMK & Trinamool Congress and Anna Hazare demand of Lokpal bill. The BJP is sitting comfortably in bigger states of Gujarat, Karnataka, Bihar and Madhya Pradesh with significant control over all 3 of the newly developed states of Jharkhand, Uttarakhand and Chattisgarh.

16 Dec. Vol 1, 2011. The Ecobizz Newsletter

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Environmental Focus

ECONOMIC GROWTH VIS-AVIS ENVIRONMENTAL DEGRADATION?


Dont blow it good planets are hard to find. But we are doing exactly opposite to it. Arent we?????? Everyone expects its country to grow and have good standard of living with higher income at disposal. For that it starts constructing roads, establishing new industries, using more and more natural resources, going for urbanization etc. While doing all this, the most important aspect has been neglected i.e. environment. The topic for concern is can we afford economic growth vis-a-vis environmental degradation. Probably the answer is no.

-Puneet Gupta

If GDP is being measured without considering any Are penalty, carbon tax environmental damages; it is not a true representasufficient to balance economic CONCERN FOR ENVIRONMENTAL DEGRAtive of nations progress. growth and environment or we DATION Since degradation of environment poses a serious need something else? Recently there had been threat in future, it seems many examples where that Gross National Happiseveral projects suffered ness (concept first introdue to environmental conduced by Bhutan) would cerns. Even the governbe followed soon by all ment also realized that the countries rather than there cannot be any industrial activity at the cost Gross Domestic Product but in a modified manof environmental damages. Vedanta, a mining ner. It takes care of environmental aspects and company didnt get a green signal to setup its follows a path of sustainable development. GNH Bauxite mining in Niyamgiri hills, Orissa due to basically measures the happiness of the people environmental issues such as drying up of river. with main emphasis on environment protection which is now gaining more popularity worldThe problem is not limited to one country rather wide. it is a global issue. Therefore in the past, many IMPACT OF ENVIRONMENTAL DEGRADATION ECONOMIC GROWTH
ON

In initial years, any country may not feel the impact of degradation on its economic growth but gradually it slows down leaving no scope for any country to overcome this problem. Any countrys growth is measured by its economic well being and healthy lifestyle of people but in case of Pakistans economy, it slowed down because of environmental degradation leading to health problems especially among poor people. The country which is known as RISING SUN having strong economic growth could not escape from the curse of environmental issues. Recently, Tsunami in Japan depicted the deteriorating condition which caused huge amount of loss to human lives as well as infrastructure placing its growth in reverse gear.

international conferences had been taken place like Kyoto protocol which aimed to curtail greenhouse gases in the atmosphere. Also, The Copen17

Dec. Vol 1, 2011.

The Ecobizz Newsletter

IBS Hyderabad

Environmental Focus
started imposing it in 2010. Recently Australia also imposed this tax to reduce negative externalities and have a balanced growth. The major challenge for any country is to have a sustainable economic growth without affecting the environment. One way could be to use enhanced and environment friendly technologies in setting up any industry. This article depicts negative side only but I think economic growth can lead to better environment also. It is the economic growth only which helps us to get latest equipment in agriculture taking it to a new height. Moreover, the quality of standard of people also gets improved to a large extent. Therefore there is a need to balance the economic growth with its environment Prevention is always better than cure. Once the symptom is detected, it is always to better to cure as soon as possible before it takes the non curable form. The same theory applies to economic growth in protecting the environment.

hagen summit was also organized in 2009 to create global awareness on climate. The upcoming Shale Gas Environmental Summit 2012 also focuses on the same issue. In this rapid development phase where all the economies have their own way to satisfy their means, these types of conferences acts as a reminder to adhere to international environmental laws and follow the sustainable path. How much is the effect of these conferences is the big question that we all need to address? MEASURES THREATS
TO MINIMIZE

ENVIRONMENTAL

There are many industrial activities that are being undertaken by companies which are having a bearing on the environment. Here the question arises how can we discourage these activities? First way way to impose penalty on the violators of the law but it has not brought any significant change so far. Now-a-days, environmental tax is being levied in the form of carbon tax. It is basically charged on carbon content of a fuel. Since carbon is the major pollutant which leads to depletion of ozone layer, strict measures have been taken by different countries to curb it. New Zealand was the first country to introduce this tax to protect the environment. India also didnt lag behind, it
18 Dec. Vol 1, 2011. The Ecobizz Newsletter

IBS Hyderabad

Indo-Sino Scenario

THE DRAGON INFILTRATED THE EAST WING WHILE THE ELEPHANT WAS BUSY
GUARDING THE WEST! Charu Attri
The dragon fears nothing except the elephant with whom he will engage in battle, entwining himself around the elephant and inflicting fatal blows. However, as the elephant finally collapses, his fall crushes the dragon to death -http://www.crystalinks.com/dragons.html A Huge naval base in Pakistan at Gwador. A tri nation highway project connecting Chittagong Kunming(city of China) in Yunan province through Myanmar. Plans To upgrade and create a deep sea port in Sonadia Island. There also no dearth of the progressive stance China has when it comes to Arunachal Pradesh. The stapled visas are just a minor signal that China is very much interested in sending out a cogent message that the eastern areas of Arunachal are their own. Recently the most worrisome incident showing the instances that China is encircling India and siphoning away resources for its own benefit is that of Brahamaputras Diversion. There has been more than enough evidence to show that the Chinese government plans to divert the river that is the lifeline to majority of the eastern states by building a damn. Now this kind of activity makes Tibet a key player wherein the land will help it reroute the waters to Chinese territory. So the burning monks have no real impact on a state which is about to use the Tibetan land to choke the life line of east India and Bhutan. They were believed to live at the bottom of the sea, where they guarded vast treasure hoards, very frequently of pearls. A quote on the dragons (mythological) The Question is whose treasure is these dragons guarding or hoarding. India currently portrays a picture of an elephant that is encircled by a spiked dragon and might just get crushed at showing any signs of retaliation. It is easy o see
19 Dec. Vol 1, 2011. The Ecobizz Newsletter

A clear warning to stay away from the South China Sea for the ONGC Videsh. The area being disputed among the claimants namely China, Taiwan, Vietnam, Philippines, Brunei and Malaysia. Despite a contract between the Vietnamese authority The Sino authorities very specifically asked the Indian Continent not to meddle.

Indo-Sino: where We are and where We need to be!

Also strategically building up military infrastructure at Coco Island, a part of Myanmar which might pose a threat to the Indian Islands nearby. Build up of a very strong infrastructure which will slice through the Nepalese land and stop close to the Indo-Nepal border. It includes the Beijing-Lhasa Rail and 4 highways to say the least.

IBS Hyderabad

Indo-Sino Scenario

that the People Republic of China is very much focussed to make more than both ends meet. Also any hurdles in its way needs to be crushed like a fortune cookie be it the autonomy of the people of china itself or its neighbouring nations. Sea, rivers, Land, it seems that China has and will exercise its ability to invade and hold as much as possible. We all know that Krishna had to explain to Arjuna that war is not the answer unless its the necessity. Lets put an economic twist to the whole situation. What is the current standing? We cannot explore the sea for potential oil sources. We have to plea another nation not to siphon away the water that is so vital for the whole of Assam. We even have to watch our own land being

claimed as someone elses. The synopsis is that India has shown tolerance levels that are not so good when it comes to its stance as a socialist state. Isnt the protection of its people the first and foremost agenda for India? Why isnt New Delhi Still talking about the South Sea of China issue? Docile is a trait that suits the cows not a nation which has the economic and military strength as that of India! It has been emphasised long and a lot of times: The Eastern India has a lot of unexplored potential. Still we see majority of the political parties obsessed with dividing and claiming votes from the rest of India. Like a godmother the government must help those who need it, not
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Dec. Vol 1, 2011.

The Ecobizz Newsletter

IBS Hyderabad

Indo-Sino Scenario

those who want it. What China doesnt have is a peoples nation wherein the people can actually decide what is good for them. India has that but not the strength to channelize it in the right direction! A billion faces with ethnicity of every type and mind sets as diverse as the colours of this nation. Then why isnt a united front portrayed? A front so strong that no dragon dares even think of toeing the line. The solution always lies in internal strengthening wherein the nations resources are completely and sustainably used. The Lokpal bill is definitely a step ahead. The right to be informed and also the stance of Supreme Court in delivering the right verdict every now and then are definitely a step forth in this direction. But all said and done the Indian Democracy needs to move en masse to brighter future. As opposed to the German economy which is production obsessed the Indian economy is showing growth specific to the service sector. That is a worrisome matter as we are vulnerable

and a dependent economy. What with the Indian Automobiles Industry taking a hit due to the Floods in Thailand? It cant be stressed enough: The core industries need more development and encouragement in our nation. Also in case of the Sino Indian concerns we need a strong military front. Even if it is just a strategic move to create a threat, still as we know to make a valid threat you need to support it with strong and substantial evidence. . Political motives must not overpower the economic and social development of India. The government should not hide away the threats that the nation faces. We need to openly embrace and work on it.

21 Dec. Vol 1, 2011. The Ecobizz Newsletter

IBS Hyderabad

Money Matters

SAVING GOOD OR NOT SO GOOD???


- Mansimran Kaur

A penny saved is a penny earned Really?? Is it tended inventories the manufacturing units preso??? In todays world of globalized economies fer to cut down on production activities. This these are the savings that are channelized into whole chain leads to nowhere but to layoffs by funds which are made available to firms in terms the production units. Coming face to face with of loans which in turn triggers growth. Does this the slump from which the people were trying to mean that countries with a higher savings rate escape. What has happened is that the layoffs are more developed and those with a low or done by the companies have left the people with negative savings rate are underdeveloped econotoo little purchasing power to match the aggremies or have a meagre scope of being economigate demand that would be in line with the agcally sound??? History has it that USA has had gregate supply needed to bring the economy out not a very high savings of the slump into an ecorate and they have been nomically healthy econsurviving on goods omy. This situation is bought on plastic money what we know as the Savings and investments go hand paradox of thrift. or credit, but to the conin hand put to good use they work The level of savings that trary USA is one amongst the most develwonders on the growth of the pertains to an economy oped economies of the economy or else everything is blown is dependent on factors world. off. like permanent income, People at large try and wealth of the economy, make predictions about the level of taxes and the the future growth of the demographic composieconomy. If and when tion. In India the act of they are pessimistic about the future and are ansaving is well imbibed into all by their ancestors ticipating a slump. Then especially in countries that it is now some kind of a habit. Not only do like INDIA people respond to this situation by the learned professionals save and make investsaving more amounts than usual and the herd ments in sophisticated instruments but the rural effect follows. Savings is nothing but abstaining poor also save. The permanent income in India is from consumption, this leads to fall in consumpnot very high compared to others as there is wide tion lessening the demand of goods and services disparity between the rich and the poor but still produced in an economy at large which leads to saving instruments like pension savings and Life warehouses piled up with stocks of unsold ininsurance had been quite popular even in1980s. ventories. When there is accumulation of uninThe demographic composition also affects what
22 Dec. Vol 1, 2011. The Ecobizz Newsletter

IBS Hyderabad

Money Matters
investments driving the economic growth down was seen during the USA credit bubble burst. FIIs that flowed into USA encouraged household spending, consumers indulged in excessive spending on durables, semi-durables or simply consumer goods. This is where the money was put to wrong use and was of no help in the economic growth. Since the loans were available at lower costs ,credit was taken in huge amounts. But because there was no investment made in sectors like manufacturing or services where the production of goods could have lead to more output, needing more employees and increased level of wages, the output levels started dropping forcing the firms to lay off their employees and reduce the wages and salaries of the existing staff. The source of income generation was weakened and the loans could not be paid back. Savings and Investments go hand in hand put to productive activities these can lead to economic growth being double, triple or quadruple but if distorted and not directed well it may cause a slump in the economy.

percentage of GDP is the savings rate. In countries where the majority of population is in their retirement age the savings will definitely reduce. Every person has a working age of nearly 40 years after which either he is no more fit to do that job or simply chooses to opt out of it and enjoy life. The earnings that were earned during this time will start depleting as and when he enters the retirement age. This is what we know as the lifecycle effect. In China where the youth forms only a small part of the countrys demographics because of it following the ONECHILD policy its domestic savings rate is now just 30% of the disposable income. The decrease in household savings can only be countered by a strong government or else this pressurizes the budget of most nations. As Japans population is growing older, the economys saving rate is also on a high and subsequently are its investments levels. As its outflow levels are more than its inflow levels it faces a current account surplus. This surplus was used to meet the current account deficit in US. FIIs have been flowing into USA by countries like Japan having surpluses in their accounts. The growth of the economy depends on how well these savings or investments are utilized or to what use are they put? A perfect example of mal

23 Dec. Vol 1, 2011. The Ecobizz Newsletter

IBS Hyderabad

For Readers

Dear Readers,

I believe you appreciate the transformation of The Focus. Your praise and encouragement has always been a source of motivation for us. Therefore, in case you have any comments or suggestions for improvement please leave them in the COMMENTS section our website www.ecobizz.weebly.com or Stu-z. We at Ecobizz will be more than happy to incorporate your suggestions.

Further, those of us with a flair for writing and are seeking an opportunity to see their thoughts in print. Here is your chance to let your dreams to turn into reality. We publish articles from our readers; you could be from any walk of life within or outside of IBS, Hyderabad, a student, a faculty, a professional, a homemaker or a self employed entrepreneur. We believe that every individual must get an opportunity to express oneself. The article should be of around 1,000 words concerning economics, politics, social issues, management or business. You can e mail your contribution to club.ecobizz@gmail.com.

Regards, Team Ecobizz

24 Dec. Vol 1, 2011. The Ecobizz Newsletter

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